Notion Of Sharing Profits Not New

December 2, 2012

The notion that Jamestown's electric utility should share its lucrative profits is not new. The city-owned Board of Public Utilities used to share profits directly with its customers through a year-end dividend.

But the idea that some of the BPU profits should be used to help cover the city's general expenses - as will be the case next year - is another matter, a controversial one with a contentious history going back more than 70 years.

The disagreement in 1940 between then-Mayor Leon Roberts, who wanted part of the BPU profit funneled into the city's general fund, and Alfred Davis, president of the BPU board of directors, was classic.

BPU President Davis believed the municipal electric system is really a consumer cooperative. He said customers of the system provided the capital with which the system was built and they are entitled to the benefits - the dividends.

However, Mayor Roberts held that the municipal utility was established on the pledged credit of the taxpayers of the city. He also pointed out the state Constitution provides for the city to earn a fair profit on the operation of the utility and for the taxpayers to benefit from that profitable operation through use of part of the profit to support the city's general fund. This would be in addition to the utility's tax-equivalency payment.

As was the custom back then, the BPU board voted at its October 1940 meeting to share profits from the sale of electricity with the utility's 17,000 customers by paying a dividend - generally 20 percent of their electric bills that year. After the vote, Mayor Roberts asked that the BPU also "donate," as the Jamestown Evening Journal called it at the time, $150,000 to the city for general purposes in order to ease the tax burden on property owners.

By a split vote, with the opposition lead by Davis, the BPU board turned the mayor down.

And so for the first time since the creation of the utility 17 years earlier, Roberts exercised the mayor's veto power over BPU board decisions. He vetoed the $190,000 appropriation for the customer dividends.

The board members left the meeting in a stalemate. Davis didn't have enough votes to override the mayor's veto, and the mayor did not have enough support to spend the BPU money the way he wanted.

They nearly came to blows at the next month's BPU board meeting before a compromise was reached: The dividend could go forward immediately and a committee would study the issue of increasing the BPU's contribution to the city.

Neither man had changed his views. But faced with the prospect of an expensive legal fight, the two sides chose a middle ground where their differences on the essential nature of the BPU did not matter.